IRS Unveils Rules to Stop Taxpayers From Shipping Built-In Losses Into U.S.

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The Internal Revenue Service unveiled proposed regulations (REG-161948-05) Sept. 6 intended to stop taxpayers from importing losses into the U.S. by using tax-free transfers of loss property to corporations that are subject to federal income tax.
“The bottom line is, the government is trying to stop the dilution of the U.S. tax base,” Mark Silverman, a partner with Steptoe & Johnson LLP in Washington, told Bloomberg BNA Sept. 6. “They're saying, we don't like you bringing in artificial losses that can be used to offset your U.S. income.”
Joseph Pari, a principal in the Washington National Tax practice of KPMG LLP, said the proposed rules are helpful, but said in a Sept. 6 interview, “Multinational corporations could be impacted in the context of the restructuring of their groups, within internal reorganizations. The regulations have a reach that is dramatically more broad than just abusive transactions.”
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